Citation NR: 9622755
Decision Date: 08/08/96 Archive Date: 08/16/96
DOCKET NO. 93-11 151 ) DATE
)
)
On appeal from the
Department of Veterans Affairs Regional Office in St.
Petersburg, Florida
THE ISSUE
Entitlement to a waiver of recovery of an overpayment of
compensation benefits.
REPRESENTATION
Appellant represented by: Disabled American Veterans
ATTORNEY FOR THE BOARD
Neil Reiter, Counsel
INTRODUCTION
The veteran served on active duty from August 1968 to July
1969.
In August 1969, as the result of gunshot wounds incurred in
combat, the veteran was granted service connection for
paraplegia, both lower extremities, evaluated as 100 percent
disabling, loss of anal sphincter control, evaluated as
100 percent disabling, and loss of bladder sphincter control,
evaluated as 60 percent disabling, for a combined evaluation
of 100 percent. He was also found entitled to special
monthly compensation benefits.
This appeal arises from a determination by the St.
Petersburg, Florida regional office that the veteran was not
entitled to a waiver of recovery of an overpayment of
compensation benefits in the amount of $143,655. The
regional office determined that fraud, misrepresentation, and
bad faith were not present in this case, but that recovery of
the overpayment would not be against equity and good
conscience.
The case was before the Board in March 1995, at which time it
was remanded to obtain additional information. In addition,
the regional office was requested to adjudicate the question
of apportionment of the veteran’s compensation benefits on
behalf of his current spouse. In April 1995, the appellant’s
spouse was advised that she was entitled to an apportionment
of the veteran’s compensation benefits. After additional
information was received, the regional office continued its
prior denial of the veteran’s claim, and the case was
returned to the Board for consideration.
In a letter requesting a waiver of recovery of the
overpayment in March 1991, the veteran indicated that he
disagreed with the creation of the overpayment. In view of
the Board’s decision below, this question is moot under the
circumstances.
CONTENTIONS OF APPELLANT ON APPEAL
The veteran contends, in essence, that he was without fault
in creating the overpayment. He maintains that he never
received notice of the change in law in 1980 that an
incarcerated veteran could not receive all of his
compensation benefits. He also contends that he used a
substantial portion of the money to pay for legal bills and
for his house, which he eventually lost because his
compensation benefits were stopped. He claims that some of
this money was misappropriated by a friend. He further
claims that any repayment would cause a financial hardship.
He states that he and his wife have no assets, that their
income is less than their expenses, and that he will need all
of his compensation for his care and daily needs when he is
released from prison.
DECISION OF THE BOARD
The Board, in accordance with the provisions of 38 U.S.C.A.
§ 7104 (West 1991), has reviewed and considered all of the
evidence and material of record in the veteran’s claims file.
Based on its review of the relevant evidence in this matter,
and for the following reasons and bases, it is the decision
of the Board that the veteran is entitled to a waiver of
recovery of the overpayment of compensation benefits.
FINDINGS OF FACT
1. The regional office has made reasonable attempts to
obtain all necessary evidence for the disposition of the
veteran’s appeal.
2. There was some minor fault on the part of the veteran in
creating the overpayment, but such fault is considered
excusable.
3. Repayment of the debt would cause an undue financial
hardship for the veteran, and there would be no unjust
enrichment if the debt was not repaid.
4. The veteran relied on the erroneous payments,
relinquishing a valuable right in reliance of such payments.
CONCLUSION OF LAW
Recovery of the overpayment of compensation benefits would be
against equity and good conscience. 38 U.S.C.A. § 5107, 5302
(West 1991); 38 C.F.R. §§ 1.963, 1.965 (1995).
REASONS AND BASES FOR FINDINGS AND CONCLUSION
The veteran’s claim is “well grounded” within the meaning of
38 U.S.C.A. § 5107. The Board is also satisfied that
adequate efforts to obtain all relevant information have been
made.
I. Background
The veteran married Dolly in May 1970, and they were divorced
in July 1971. They remarried in September 1971. They had
two children. They were separated in January 1972. Dolly
received an apportionment for herself and the children soon
thereafter. The veteran and Dolly were divorced in February
1973, and an apportionment for the veteran’s children
continued thereafter.
The veteran married Misty in January 1982. In July 1990,
Misty reported that she had been separated from the veteran
since August 1982.
The record indicates that the veteran received various award
letters between 1969 and the early 1980’s, but that none of
these award letters informed the veteran that he could not
receive payment of compensation benefits if he were
incarcerated for a felony. An award letter he received in
January 1971 informed him that he was to notify the regional
office immediately in writing of any change of address.
In September 1990, the regional office received notice that
the veteran had been incarcerated for a felony beginning on
August 21, 1987, with a scheduled release date of May 9,
2000.
In November 1990, Misty indicated again that she had
separated from the veteran in September 1982 and that she had
been living with another man for eight years.
In early 1991, the regional office retroactively reduced the
veteran’s award to the 10 percent rate, effective October 21,
1987, creating the present overpayment.
On a financial status report dated in March 1991, the veteran
reported that his only income while incarcerated was his
compensation benefits at the 10 percent rate ($70 monthly).
He reported that he had monthly expenses of $2,064, including
a rent or mortgage payment of $600. He explained that he
received $1,000 monthly in his institutional account, that
his wife received approximately $800 monthly, and that $800
was used in hobby and craft purchases. It is noted that the
veteran’s award at the time it was discontinued in January
1991 was $3,921 monthly.
Pursuant to her claim for apportionment, Misty was awarded an
apportionment of $600 monthly, effective from August 1, 1990.
This apportionment was continued until their divorce in
February 1992.
The veteran submitted a copy of a deed for the purchase of
property in March 1986 for $42,000. The agreement indicated
that the veteran was to pay a mortgage of $588 monthly.
Notice was received that foreclosure on the property was made
by the mortgage company in February 1992. It was indicated
that the veteran owed the mortgage company $31,646, and the
veteran reported that after sale of the house, he still owed
$4,046.
On a financial status report dated in January 1992, the
veteran reported that he had no income, that his monthly
expenses were $270, and that he had no assets.
The veteran married Vera in December 1992. She requested an
apportionment of the veteran’s benefits. On a financial
status report in December 1992, Vera reported that she was
receiving Social Security benefits of $533 monthly, and that
her total monthly expenses were $739. She reported that she
and the veteran had no children, and no assets, aside from a
car.
Pursuant to the Board’s remand, the veteran submitted a
statement from his attorney showing that the veteran incurred
$33,000 of attorney’s fees. The veteran also submitted a
medical bill showing that his wife incurred a medical bill of
$721, for hospitalization in November 1993.
Pursuant to the claim for apportionment, the RO has granted
Vera an apportionment of the veteran’s compensation benefits,
in the amount of $500, effective from January 1. 1993.
II. Analysis
A waiver of recovery of an overpayment is precluded where it
is found that the debt was caused by fraud,
misrepresentation, or bad faith on the part of the debtor.
The regional office has determined that there was no fraud,
misrepresentation, or bad faith in this case, and the Board
agrees. As a result, entitlement to a waiver of recovery of
the overpayment of compensation benefits is dependent on
whether the recovery of the debt from the appellant would be
against equity and good conscience. 38 U.S.C.A. § 5302;
38 C.F.R. §§ 1.963, 1.965. In this regard, the facts and
circumstances in the particular case must be weighed
carefully. Different factors will enter into such decision.
The elements to be considered, which are not intended to be
all inclusive, are listed as the relative fault on the part
of the debtor, whether there was fault on the part of the
Government, whether there was any unjust enrichment, whether
there would be undue financial hardship due to recovery of
the overpayment, whether recovery of the overpayment would
defeat the purpose of benefits otherwise authorized, and
whether the debtor relinquished a valuable right or changed
his position by reason of having relied upon an erroneous
benefit.
In this case, it is noted that none of the award letters that
are of record indicate that the veteran was informed that he
could not receive all of his compensation benefits upon being
incarcerated for a felony. He had been informed that he was
to notify the regional office immediately of any change of
address. When he was incarcerated, he failed to notify the
regional office of his change of address. However, review of
the record reveals that the veteran had been getting his VA
correspondence and checks at a postal box address in Tampa
Florida since 1971. The VA had never sought, or obtained, an
actual street address for the veteran. Furthermore, the VA
was put on notice in October 1980, after the current law went
into effect, that the veteran was incarcerated for a prior
offense, but never checked with the veteran to verify this or
inform him that incarceration would affect his entitlement to
compensation. His compensation continued, apparently because
the RO’s efforts to verify his status at that time were
inadequate and incomplete. For these reasons, if there is
any fault on the part of the veteran, it is very minor and
excusable, especially when compared with the deficiencies in
the actions of the RO as noted above. In essence, the
veteran did not receive notice that incarceration for a
felony would adversely affect his right to receive his
compensation benefits, or that the VA needed better address
information.
Fault is not the only criterion to determine whether it would
be against equity and good conscience to recover the debt.
The veteran has demonstrated that he relied on the continued
compensation payments to pay his mortgage. Once his
compensation benefits were terminated, he lost the ability to
pay for his home. In this respect, he relied upon the
erroneous benefit and relinquished a valuable right to make
other arrangements for the payment of his mortgage. He
apparently also lost other assets when his compensation
stopped.
With respect to whether it would be an undue financial
hardship on the appellant to recover the debt, it is noted
that he is a ward of the state as long as he remains
incarcerated. His wife is receiving a part of his
compensation benefits as an apportionment currently.
However, the veteran did lose other assets when he lost his
home, and his compensation can not be increased while he is
incarcerated. Once he is released from prison, he will need
his compensation benefits to again provide for his wife and
his own needs. In this regard, some consideration must be
given to the nature and extent of his disabilities, how such
disabilities were incurred, the expenses he must incur for
special services required because of his disabilities and how
such disabilities impact on his ability to function. The
Board finds that it would be an undue financial hardship on
the veteran to recover the debt.
The Board also believes that failure to recover the debt from
the veteran would not cause unjust enrichment. Part of the
veteran’s compensation benefits which represented the debt
did pay for certain legitimate legal expenses, and part of
the debt was used to pay the mortgage on the veteran’s home.
The evidence reflects that a foreclosure on the home occurred
because he could not pay his mortgage when his compensation
benefits were drastically reduced. Part of the money was
allegedly stolen from the veteran. The Board also believes
that recoupment by withholding of the veteran’s compensation
benefit would defeat the purpose of benefits otherwise
authorized under the circumstances in this case. As
previously indicated, the veteran will need his compensation
benefits to provide for his needs when he is released from
prison.
In balancing the various criteria, the Board has decided that
recovery of the overpayment would be against equity and good
conscience. The Board has weighed the factors in support of
the veteran, and the Board believes that the negative
circumstances do not outweigh those favorable to the veteran
in this case when considering the question of whether
recovery of the overpayment would be against equity and good
conscience. 38 U.S.C.A. § 5302; 38 C.F.R. §§ 1.963, 1.965.
ORDER
Entitlement to a waiver of recovery of an overpayment of
compensation benefits is established. The benefit sought on
appeal is granted.
ROBERT D. PHILIPP
Member, Board of Veterans’ Appeals
The Board of Veterans’ Appeals Administrative Procedures
Improvement Act, Pub. L. No. 103-271, § 6, 108 Stat. 740, 741
(1994), permits a proceeding instituted before the Board to
be assigned to an individual member of the Board for a
determination. This proceeding has been assigned to an
individual member of the Board.
NOTICE OF APPELLATE RIGHTS: Under 38 U.S.C.A. § 7266 (West
1991, amended by Supp. 1995), a decision of the Board of
Veterans’ Appeals granting less than the complete benefit, or
benefits, sought on appeal is appealable to the United States
Court of Veterans Appeals within 120 days from the date of
mailing of notice of the decision, provided that a Notice of
Disagreement concerning an issue which was before the Board
was filed with the agency of original jurisdiction on or
after November 18, 1988. Veterans’ Judicial Review Act,
Pub. L. No. 100-687, § 402, 102 Stat. 4105, 4122 (1988). The
date which appears on the face of this decision constitutes
the date of mailing and the copy of this decision which you
have received is your notice of the action taken on your
appeal by the Board of Veterans’ Appeals.
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